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TransCanada Keystone Pipeline Temporarily Halted in Texas

Dec. 11 (Bloomberg) -- TransCanada Corp. must temporarily
stop work on part of its Keystone XL pipeline while a Texas
judge evaluates a landowner’s challenge that the line can only
be used for crude oil and not bitumen obtained from Canadian tar
sands.

Michael Bishop, who granted TransCanada an easement across
his property in Nacogdoches County, obtained a temporary
restraining order from Texas state court Judge Jack Sinz in
Nacogdoches on Dec. 7. The order blocks the company from working
on Bishop’s property for two weeks while allowing work on other
sections of the pipeline to proceed.

“He’s saying we can’t transport anything but crude oil,
which is what we’re primarily going to carry,” Tom Zabel,
TransCanada’s lawyer, said today in a phone interview. “We’re
trying to get a hearing on Thursday to dissolve the order.”

TransCanada, based in Calgary, has been battling landowners
and environmental groups at multiple sites along the
southernmost leg of its 2,151-mile pipeline between western
Canada and the U.S. refining industry complex on the Texas Gulf
coast.

So far, none of the legal challenges has permanently halted
construction work on the pipeline, which will carry liquefied
bitumen obtained by heating tar sands, along with traditional
crude oil produced from fields in North Dakota, Oklahoma and
western Texas, Zabel said.

‘Legal Authority’

“Under Texas law, TransCanada has been granted the legal
authority to construct this pipeline,” David Dodson,
TransCanada’s spokesman, said in an e-mailed statement.
“Construction has commenced on the property that is the subject
of the temporary restraining order, and the product the Gulf
Coast Pipeline will transport is crude oil. Mr. Bishop’s request
does not impact overall construction, and we are on track to
bring this pipeline into operation in late 2013.”

Sinz granted Bishop’s temporary restraining order without
notifying TransCanada, saying Bishop “has been defrauded and
denied his constitutional rights,” according to the order.

Bishop has attracted support from the Sierra Club and
Natural Resources Defense Council, who are fighting the Keystone
pipeline in other courts.

‘He’s Not Alone’

“He’s not alone in this fight against this pipeline,”
Doug Hayes, a Sierra Club attorney, told reporters in a
conference call today. “Communities from Montana to Texas are
deeply concerned about the impacts to aquifers, wetlands, their
drinking water supplies. Everywhere, there’s opposition to this
dangerous project, but TransCanada is out there building it
anyway.”

Hayes said he isn’t aware of any other court challenges
using Bishop’s argument that bitumen isn’t crude oil in an
attempt to stop the Keystone pipeline.

Bishop, a 64-year-old chemist who owns a biofuels company,
claims the Keystone pipeline is only permitted to carry crude
oil that is liquid under normal atmospheric temperatures and
pressure. Bitumen is “solid at atmospheric temperature and
pressure and must be diluted for transport via pipeline,” he
said in his complaint.

The U.S. Internal Revenue Service ruled last year that
crude oil isn’t the same as tar sands, and that “tar sands
oil” isn’t subject to the U.S. excise tax on petroleum, Bishop
said in his complaint. He said TransCanada has “intentionally
misled and misrepresented” the nature of its product to
regulators, landowners and the public in order to obtain permits
and eminent domain rights to push its project through.

‘Intimidating Tactics’

“It is also a fact that the firm used coercion and
intimidating tactics to obtain the property in question and that
acting on the validity of their claim, I settled under duress,”
Bishop said in an affidavit filed with his request for a
restraining order.

Bishop said in a phone interview today that TransCanada
didn’t try to negotiate with him before survey crews trespassed
on his 20-acre property near Nacogdoches, located about 100
miles northeast (161 kilometers) of Houston, a year ago.

He said he offered TransCanada free use of a six-acre
existing pipeline easement along the edge of his land. He balked
when the company selected a route “that comes straight through
my front yard,” obliterating 75 percent of his family’s
vegetable garden and bringing the pipeline within 120 feet of
his home of more than 20 years.

“I’ll give the money back, that’s not the issue,” Bishop
said by phone of the settlement in which TransCanada paid him
more than 10 times its original offer for his easement. “I just
want them to leave my homestead alone.”

Bishop has filed a separate lawsuit in state court in
Austin against Texas pipeline regulators. In that action, he is
challenging Keystone’s certification as a common carrier under
state law.